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February 20, 2019 9:28 pm

For 2018 through 2025, the miscellaneous itemized deduction for investment-related costs is not deductible. Before 2018, these amounts were subject to the 2%-of-adjusted-gross-income floor. After 2026...

February 20, 2019 9:26 pm

Because you repaid an amount you thought you had an unrestricted right to and which may have been included in income (up to 85%) in an earlier year, special rules apply. The repayment will be netted a...

January 16, 2019 8:54 pm

Severance pay is taxable in the year in which it is received. If it’s received in a lump sum, then it’s taxable in one year. If it’s spread over two or more years, then the portion received in e...

January 16, 2019 8:53 pm

Unreimbursed employee business expenses used to be a miscellaneous itemized deduction subject to the 2% of adjusted gross income floor. However, this deduction has been suspended for 2018 through 2025...

January 16, 2019 8:52 pm

The basis for depreciation is the lower of the adjusted basis of the property (usually cost) or its fair market value on the date it starts to be used for business. For equipment (e.g., a computer, fu...

January 4, 2019 12:56 am

The tax law allows individuals who receive foster care payments to exclude them from gross income if all three of the following conditions are met: (1) Payments are made pursuant to a foster care prog...

January 4, 2019 12:54 am

It depends. Legal fees related to a recovery for unlawful discrimination under various federal laws such as the Family and Medical Leave Act are deductible as adjustments to gross income (i.e., they a...

January 4, 2019 12:53 am

For 2018 through 2025, there is no phase-out of itemized deductions for high-income taxpayers....

January 4, 2019 12:51 am

Yes. Executor’s fees are taxable income. But if a taxpayer is not a professional executor, the fees are reported as miscellaneous income (not business income) and are not subject to self-employment ...

November 19, 2018 10:21 pm

A qualified charitable distribution (QCD) can only be taken from a traditional or Roth IRA. It cannot be taken from a SEP or SIMPLE-IRA. However, SEPs and SIMPLE-IRAs can be rolled over to an IRA and ...

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If you fail to meet the two-out-of-five year ownership and use tests, you can qualify for a partial exclusion (related to the period of time you were in the home) if you can show that the move was bec...

No. Medicare benefits are tax free; they don’t count as income for determining filing and are not taxed. What’s more, Medicare premiums are tax deductible if you itemize your personal deductions a...

Eligibility for a health savings account (HSA) is determined for each individual. If you qualify, you can set up an account for yourself even though your spouse is ineligible for one because of being ...

You must attach your own statement to your tax return that includes the following information:The transaction was a loan and not a gift (this can be proven by showing a promissory note that inclu...

For 2014, large employers were required to report coverage on employees’ W-2 forms; small employers could do so voluntarily. Employers could also voluntarily report coverage to employees on Form 109...

It’s time to look at a calendar to see whether you meet the time test for the home sale exclusion. You must have owned and used the home as your principal residence for at least two of the five year...

When you sell property, the difference between what you receive and your tax basis in the property produces gain or loss. When selling property, include what you paid for this, such as the land and th...

If you pay the money directly to the facility, there is no dollar limit on how much you can effectively gift to benefit your mother for purposes of federal gift taxes. What’s more, this action may e...

Under the home sale exclusion rules, you can use part of the exclusion if you cannot meet the two-year test for owning and living in the home under certain conditions. The failure to meet the test mus...

You can take a tuition and fees deduction only for a dependent, so if your granddaughter is not your dependent, you’re out of luck. If she were your dependent, the deduction is capped at $4,000 (you...

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While you clearly have an economic loss, tax rules prevent you from deducting the decline in value from your $120,000 purchase price to the value at the time you converted the condo to rental property...

No, there is no carryback for capital losses. Capital losses can offset capital gains and up to $3,000 of ordinary income. Any capital loss over this limit can be carried forward indefinitely to offse...

No. Trustees or issuers of traditional IRAs must furnish Form 5498 to participants each year if there is a contribution (including a rollover) or a distribution. It is merely an information return tha...

It’s time to look at a calendar to see whether you meet the time test for the home sale exclusion. You must have owned and used the home as your principal residence for at least two of the five year...

Suspended passive losses become deductible in the year in which there is a complete disposition of the property in a fully taxable event to an unrelated party. The fact that the losses remained suspen...

When you sell property, the difference between what you receive and your tax basis in the property produces gain or loss. When selling property, include what you paid for this, such as the land and th...

Gain or loss is the difference between the basis of the stock and what you received for it. The basis of inherited stock used for determining gain or loss is the estate tax value, which is usually the...

The payment of principal is never a deductible expense. However, check the payoff information to see whether there were any fees paid in addition to principal; the fees may be considered a selling exp...

There’s no simple answer. The tax treatment of the award—as ordinary income, as capital gains, or as a nontaxable return of investment—depends on the origin of the claim. The question you have t...

The dollar limit for contributions to a medical FSA for 2015 is $2,550. Each spouse can contribute up to this limit as long as each works for an employer offering such a plan. This enables a couple to...

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Because you are a volunteer and not a paid educator who works at least 900 hours a year, you cannot use the above-the-line deduction of up to $250 from gross income (allowed even if you don’t itemiz...

Unfortunately, no. Gifts to individuals, no matter how needy, are never deductible. Only gifts to IRS-recognized charities are deductible if you itemize deductions. In the case of the Louisiana disast...

A repayment of principal is never deductible. Interest on the loan may be deductible, depending on what you used the proceeds for. If you purchased securities, the interest is treated as investment in...

This rule expired at the end of 2014 and has not yet been extended for 2015. Many believe it will be extended, but it is advisable to wait until later this year to see what Congress does before making...

If you are talking about federal income taxes, they are never deductible. If you paid state income taxes for 2014 when you filed your return in 2015, the additional taxes you paid with your return bec...

The home office deduction is allowed for both employees and self-employed individuals, with this difference: employees must use their home office for the convenience of the employer (not for personal ...

Not yet. The more than four dozen tax rules that expired at the end of 2014 have yet to be extended for 2015. Stay tuned!...

Suspended passive losses become deductible in the year in which there is a complete disposition of the property in a fully taxable event to an unrelated party. The fact that the losses remained suspen...

No. Eligibility for the earned income tax credit is based on income, not age. The amount of the credit varies with the number of qualifying children you have. A modest credit applies even if you have ...

Job-loss mortgage insurance is a policy that pays some or all of the mortgage payments (and, under some policies, real estate taxes and homeowners insurance) if you lose your job. The IRS has not rule...

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Only a taxpayer, or a representative with a taxpayer’s permission, can obtain copies of previously filed tax returns. Ask your parents to take action:They can request a free copy of a transcrip...

In the case of a joint tenancy with someone who is not a spouse and who did not contribute anything, the basis depends on the estate tax value of the property (even if the estate is too small to be re...

Once you are enrolled in Medicare, you are no longer eligible to contribute to an HSA. Your contributions must be prorated for the period in which you have a high-deductible health plan (HDHP). Thus, ...

The IRS has yet to rule on the tax treatment of relocation payments under the Home Affordable Foreclosure Alternatives (HAFA) program, and some people in your situation have received a Form 1099-A or ...

There are several tax breaks for college tuition payments: an above-the-line deduction (this break expired at the end of 2013 but likely will be extended for 2014), education tax credits, an exclusion...

Federal income taxes are not deductible. Similarly, you cannot deduct your payment of FICA on wages or the additional Medicare taxes on earned income (0.9% over your threshold amount) and net investme...

No. A Schedule C is required if you are in a trade or business. However, you can report miscellaneous income on line 21 of Form 1040 (“other income”). This miscellaneous income is not subject to s...

It depends on whether you’re viewed under the tax law as a developer. If you hold the lot as investment property, any gain you reap is taxed as capital gain. You may also owe an additional 3.8% tax ...

Earned income remains taxable regardless of age. Similarly, such income continues to be subject to Social Security and Medicare taxes (FICA for an employee; self-employment tax for a self-employed per...

No. The computation of alternative minimum tax (AMT) starts with adjusted gross income from which itemized deductions other than miscellaneous itemized deductions and state and local taxes are subtrac...

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